U.S. funds feasibility study for proposed intermodal terminal in far-south Mexico
9/13/2023
By Jeff Stagl, Managing Editor
Located in southern Mexico near Guatemala, the state of Chiapas is a key trade transit zone between Mexico and Central America. The city of Ciudad Hidalgo serves as Mexico’s primary border crossing point with Guatemala and is home to Mexico’s southernmost port.
Yet, most of the freight moving through Chiapas is transported by trucks — only 10% to 15% of the cargo is railed. That’s something the governments of Mexico and Chiapas, along with the United States, aim to change.
Due to Chiapas’ strategic location, modernizing rail infrastructure in the state could significantly improve the transportation supply chain between Mexico, Guatemala and the rest of Central America, officials at all three governments believe. To help grow the freight-rail system in southern Mexico, Chiapas leaders have proposed the development of an intermodal terminal in the state.
The United States is playing a role in that plan, too. The U.S. Trade and Development Agency (USTDA) has provided the Chiapas economy and labor ministry a $960,000 grant to perform a feasibility study on the proposed intermodal terminal.
The agency received a request for financial assistance for the study from Mexico’s Agencia Reguladora de Transporte Ferroviario and the Chiapas government. In 2021, the U.S. government announced plans to provide $250 million for projects of interest in southern Mexico, including infrastructure initiatives.
Is the project feasible and viable?
The USTDA is accepting bids until Oct. 6 from firms interested in conducting the feasibility study, which will help identify a site and determine the intermodal terminal’s physical, operational and technical specifications. The selected firm also will complete economic, financial and market analyses that determine the project’s viability and the effectiveness of integrating freight between railroads and trucks in the region.
“The government of Chiapas is currently considering all possible options for the entity that would run and operate the intermodal rail terminal (e.g., fully private, public-private partnership or government-run/operated). The study will help inform the government’s decision,” said USTDA Director for Public Affairs Paul Marin in an email.
The state of Chiapas is a key supply-chain region for freight moving between Mexico, Guatemala and other points in Central America. Currently, most of that cargo moves by truck. 70172--sstock-2283411865New intermodal and logistic services provided through the terminal would help relieve heavy truck traffic-related vehicular congestion, environmental impacts and transportation delays for goods moving in and out of the Puerto Chiapas port, project organizers believe. In addition, the facility is projected to increase Puerto Chiapas’ capacity and productivity; improve asset utilization for port, rail and trucking service providers; increase transportation productivity and intermodal capacity; reduce transportation costs; and create a more competitive environment for the transportation of containerized cargo.
“Furthermore, the construction of the intermodal terminal could enhance competition between rail and road transportation modes, become a pole of attraction for new value-added activities and industrial development in areas near the facility, and improve the overall operational efficiencies of the port,” Chiapas officials say.
The terminal would be designed to assemble trains up to 60 rail cars long; load and unload trucks on specifically designed service roads; load and unload trains and trucks with automated gantry and yard cranes; and perform mechanized container transfers on tracks outside main rail lines.
Line K: The terminal’s rail link
The intermodal facility would be located near Line K, a major rail route that the government of Mexico continues to rehabilitate and reconstruct. The government-run Line K will connect with other major privately operated freight-rail lines in the region, said Marin.
The government of Mexico is advancing Ferrocarril del Istmo de Tehuantepec (FIT), a key freight-rail project designed to build or upgrade more than 600 miles of track connecting the nation’s Atlantic and Pacific coasts. FIT includes three large segments: Line Z extending 190 miles from Coatzacoalcos to Salina Cruz to connect the Gulf of Mexico with the Pacific Ocean; Line FA extending more than 200 miles from Coatzacoalcos to Palenque; and Line K extending 285 miles from Ixtepec, Oaxaca, to Ciudad Hidalgo at the Mexico-Guatemala border.
The project aims to interconnect rail lines with ports in Salina Cruz, Coatzacoalcos, Puerto de San Benito (Puerto Chiapas) and Dos Bocas, Mexico.
Line K is the FIT’s longest and costliest portion, at an estimated $2.5 billion. To be completed in third-quarter 2024, Line K involves an old rail line that was damaged by Hurricane Stan in 2005 and includes 526 railroad bridges and 387 drainage structures.
Meanwhile, the $1 billion Line Z is nearly complete and includes 82 bridges and 290 drainage structures, while the $661 million Line FA involves 87 railroad bridges and 680 drainage structures, and is scheduled for completion in third-quarter 2024.
The development of Line K is relevant to the proposed intermodal terminal because the line will become a catalyst for the movement of freight in southern Mexico and the border connection with Guatemala and the rest of Central America, Mexican and Chiapas government officials say.
“The development of the line is expected to support Puerto Chiapas in export and import activities as the port will have the necessary rail connections to the rest of the country and to the border with Guatemala,” they say.
The feasibility study will help the Mexican and Chiapas governments determine the intermodal facility’s benefit-cost breakdown and whether the terminal should be considered a national priority initiative.
Earlier studies have found the facility likely would generate revenue opportunities for U.S. exports, such as locomotives, rail cars, intermodal technologies and products, and terminal tractors. Mexican estimates peg the value of the terminal’s U.S. export potential at about $50 million.
